Find purchase price of annuity if effective annual interest

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Reference no: EM131319941

1. Deferred annuity is purchased with annual payments for twenty-five years. The first payment of 500 starts at the end of the tenth year and subsequent payments increase 3% per year. Find the purchase price of the annuity if the effective annual interest rate is 7%. (A) 3,648 (B) 3,903 (C) 4,176 (D) 5,187 (E) 5,713

2. Annual deposits of 50 are made into a fund earning a 5% effective annual rate until the fund accumulates to 1,500. Find the loan payment required to pay off a 1,500 loan of the same duration and interest rate. (A) 50 (B) 75 (C) 100 (D) 125 (E) 150

Reference no: EM131319941

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